Student borrowers face penalty for co-signer’s misfortunes.

As a debtor you have consistently been making payments each month cutting down the balance. Suddenly your cosigner dies or files for bankruptcy protection. Now, your creditor is demanding that you pay back the entire loan – despite your good faith and consistent payments.

Automatic defaults are a big problem for private student loans according to a report by the Federal Consumer Financial Protection Bureau.

More than 2,300 private student loan complaints and 1,300 debt collection complaints related to student loans submitted to the Bureau since October 1, 2013 have been analyzed.

The Bureau’s student loan authority, Rohit Chopra, explained that the agency cannot determine how many borrows are impacted by automatic defaults. The problem occurs with many loan and lender servicers.

The majority of student debt is from federal loans which typically do not require a co-signer.

Private loans have different rules than federal however. Private loans are typically more common for high-debt borrowers and they usually require a co-signer. More than 90% of private loans are cosigned and typically by a grandparent or parent.

Automatic defaults can be extremely damaging for borrowers because potential employers and landlords can check credit reports. Defaults can destroy an otherwise good credit score.

Here are some questions about private student loans and co-signers:

How quickly can an automatic default appear on my credit report after my co-signer dies or files for bankruptcy?

Most lenders check their credit bureaus typically every month. The effects can be seen on your credit report within a short amount of time.

Can I ask to have my co-signer released from my loan?

Typically lenders will promote options of having a co-signer released if the debtor has met a certain amount of consecutive on-time payments for a certain amount of time (two-years usually) and has decent credit. Lenders however have been known to change the policy even after meeting the criteria to release the co-signer. It is best to check for certain.

How do I know if I'm eligible to have my co-signer released?

Always be sure to ask your creditor about its policy and request the moment you have met the criteria. It is good to do this in case anything happens to your co-signer. Also, co-signers can request a release for themselves.

Marcadis Singer, PA

Florida Collection Attorney

5104 South Westshore Blvd.

Tampa, Florida 33611

info @ marcadislaw.com

(888) 547-1881

(813) 288-1881

New Clients 

Ext. 247 Gil Singer

Ext. 240 Ralph Marcadis

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Plan Ahead! Minimize Tuition Debt

With higher tuition prices and more student debt on the line, Point Loma Nazarene's Reed says that it's even more important for families to financially plan ahead. That means not only creating a college savings strategy early and taking advantage of compound interest, but also having a serious chat about how much debt the family can handle. "A lot of people tend to think 'someday I'll pay this back,' but really should be thinking about 'should I take out this much money,' and seeing in my chosen career path what my starting salary is," Reed says. "I know that's a hard conversation to have with an 18-year-old traditionally coming into a college experience, but the more we can encourage students and families to think ahead, the better off they'll be on the repayment side." According to the National Association of Colleges and Employers, the average 2013 college graduate had a starting salary of $45,327, with humanities and social science majors ranking lowest with average salaries of $37,791 per year, while engineers bring home more than $62,000 annually. Students can find starting salary information for their majors at NACEweb.org.

Figure 1: Average Salaries by Discipline

Broad Category	2013 Average Salary	2012 Average Salary	Percent Change
Business	$55,144	$53,900	2.3%
Communications	$44,552	$43,717	1.9%
Computer Science	$59,084	$59,221	-0.2%
Education	$40,590	$40,668	-0.2%
Engineering	$62,564	$62,655	-0.1%
Humanities & Social Sciences	$38,045	$36,988	2.9%
Math & Sciences	$42,956	$42,471	1.1%
Overall	$45,633	$44,482	2.6%

Source: January 2014 Salary Survey, National Association of Colleges and Employers

- See more at: http://naceweb.org/s01082014/salary-survey-class-of-2013.aspx?land-salres-lp-2-spot-salsv-02142014#sthash.Wc9z8wRt.dpuf

Marcadis Singer, PA

Florida Collection Attorney

5104 South Westshore Blvd.

Tampa, Florida 33611

info @ marcadislaw.com

(888) 547-1881

(813) 288-1881

New Clients 

Ext. 247 Gil Singer

Ext. 240 Ralph Marcadis

Existing Client Client Liaison

Ext. 242

To Pay a Claim

Ext.  245

#7 Shop Shop Shop

You shop for clothes, you shop for cars, you will shop your house, shop your college as well.

Often college choices are not researched and sometimes choices border on totally illogical.   Price does not always equal quality.

Thank You Wells Fargo for this image.

One of the easiest ways to score financial aid is to apply to schools that offer lots of it to students like you. The National Center for Education Statistics' College Navigator tool can help you find institutions that offer substantial aid packages to families in your income bracket while The Education Trust's College Results Online database can identify colleges that are similar to your dream school in net price and academic competitiveness.

Debt follows you for life, it isn't forgiven in bankruptcy.  Your college education, or your children's has to be shopped, weighed against earnings, and has to not pose such a large burden on the family or student that the debt cannot be paid.

Marcadis Singer, PA

5104 South Westshore Blvd.

Tampa, Florida 33611

info @ marcadislaw.com

(888) 547-1881

(813) 288-1881

New Clients 

Ext. 247 Gil Singer

Ext. 240 Ralph Marcadis

Existing Client Client Liaison

Ext. 242

To Pay a Claim

Ext.  245

Another in our stand against unreasonable Student Debt (Con't)

5.  Consider non-traditional Student Loan Debt Providers

Federal Lans nearly always provide better interest rates on your college debt, and typically provide better debtor protections.

 However, if you need a private loan supplement, there are more and more interesting alternatives in the emerging crowd sourcing market.

• scholarshipproz.com/provides students with a platform to make their needs known and turn their education into a family, friend and community event, says vice president of marketing, Orlando Espinosa. 

• Upstart.com offers crowd funded loans in exchange for a percentage of the borrower's income over the next five to 10 years

• YouCaring.com lets users set up free fundraising pages for a variety of causes and students can share their pages with donors around the world through social media sites like Facebook, Twitter and Pinterest.

• GradSavecom  directs donors to contribute directly into a user’s 529 plan, an education savings plan operated by either a state or higher education institution designed to help families save for college.Watch out though, not everyone gets their campaigns fully funded.

• FiPath allows parents to direct the funds into a savings account without paying fees for early withdrawal, Harrington explains that “collective peer pressure” prevents anyone from dipping into the account.

These nontraditional sites are an interesting alternative, just be careful as not all campaigns end up funded.  Be creative, shop as best you can to minimize your college debt, and debt expense.

Marcadis Singer, PA

5104 South Westshore Blvd.

Tampa, Florida 33611

info @ marcadislaw.com

(888) 547-1881

(813) 288-1881

New Clients 

Ext. 247 Gil Singer

Ext. 240 Ralph Marcadis

Existing Client Client Liaison

Ext. 242

To Pay a Claim

Ext.  245